Session 1a

1. Session 1a

2. Overview • Web Site Tour  • Course Introduction Decision Models -- Prof. Juran

3. 2 Modules • Module I: Optimization • Module II: Spreadsheet Simulation Decision Models -- Prof. Juran

4. Formulation Real world System Decision Model What is Decision Modeling? Decision Modeling Process Deduction Implementation Interpretation Real World Conclusions Model Conclusions Decision Models -- Prof. Juran

5. Seven-step Process • Definition • Data Collection • Formulation • Model Verification • Selection of an Alternative • Presentation of Results • Implementation Decision Models -- Prof. Juran

6. Revised Process for This Course 0. Conclusions and Recommendations 1. Managerial Definition 2. Formulation 3. Solution Methodology 4. Discussion? Appendices? Decision Models -- Prof. Juran

7. Software • Microsoft Excel • Data Table • Goal Seek • Solver • Premium Solver, SolverTable • Analysis Toolpack • Charts and Graphs Decision Models -- Prof. Juran

8. Software • The Decision Tools Suite • @Risk • PrecisionTree • TopRank • BestFit • RiskView • StatPro Decision Models -- Prof. Juran

9. Software • Other Software • Crystal Ball • Extend • Sigma Decision Models -- Prof. Juran

10. Descriptive Model • Approximates how a real system works (or would work) given certain assumptions • Does not give us the “right answer” • Focus for Module 2 Decision Models -- Prof. Juran

11. Prescriptive Model • Identifies the “right answer” • Focus of Module 1 Decision Models -- Prof. Juran

12. What is Optimization? • A model with a “best” solution • Strict mathematical definition of “optimal” • Usually unrealistic assumptions • Useful for managerial intuition  Decision Models -- Prof. Juran

13. Elements of an Optimization Model • Formulation • Decision Variables • Objective • Constraints • Solution • Algorithm or Heuristic • Interpretation Decision Models -- Prof. Juran

14. Toomer Sporting Goods Decision Models -- Prof. Juran

15. Managerial Problem Definition Ishani Mukherjee must decide how many to produce of two products. Decision Models -- Prof. Juran

16. Managerial Problem Definition • 2-piece Yellow Jacket • 4-piece Sachin Special Decision Models -- Prof. Juran

17. Formulation • Define the choices to be made by the manager (called decision variables). • Find a mathematical expression for the manager's goal (called the objective function). • Find expressions for the things that restrict the manager's range of choices (called constraints). Decision Models -- Prof. Juran

18. Decision Variables Decision Models -- Prof. Juran

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20. Decision Models -- Prof. Juran

21. Objective Function A mathematical expression of the manager’s goal in terms of the decision variables. Decision Models -- Prof. Juran

22. What is the objective? Maximize or minimize? Decision Models -- Prof. Juran

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27. Constraints • Find expressions for the things that restrict the manager's range of choices, in terms of the decision variables. Decision Models -- Prof. Juran

28. Leather Constraint • Each Yellow Jacket uses 4 ounces of leather and each Sachin Special uses 5 ounces. • There are 6,000 ounces available. Decision Models -- Prof. Juran

29. Leather Constraint Decision Models -- Prof. Juran

30. Decision Models -- Prof. Juran

31. Nylon Constraint • Each Yellow Jacket uses 3 meters of nylon and each Sachin Special uses 6 meters. • There are 5,400 meters available. Decision Models -- Prof. Juran

32. Nylon Constraint Decision Models -- Prof. Juran

33. Decision Models -- Prof. Juran

34. Cork Constraint • Each Yellow Jacket uses 2 ounces of cork and each Sachin Special uses 4 ounces. • There are 4,000 ounces available. Decision Models -- Prof. Juran

35. Cork Constraint Decision Models -- Prof. Juran

36. Decision Models -- Prof. Juran

37. Labor Constraint • Each Yellow Jacket uses 2 minutes of general labor and each Sachin Special takes 2.5 minutes. • There are 3,500 minutes available. Decision Models -- Prof. Juran

38. Labor Constraint Decision Models -- Prof. Juran

39. Decision Models -- Prof. Juran

40. Stitching Constraint • Each Yellow Jacket takes 1 minute of stitching time and each Sachin Special takes 1.6 minutes. • There are 2,000 minutes available. Decision Models -- Prof. Juran

41. Stitching Constraint Decision Models -- Prof. Juran

42. Decision Models -- Prof. Juran

43. Nonnegativity Constraints • Each Yellow Jacket takes 1 minute of leather and each Sachin Special takes 1.6 minutes. • There are 2,000 minutes available. Decision Models -- Prof. Juran

44. Nonegativity Constraints Decision Models -- Prof. Juran

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46. Decision Models -- Prof. Juran

47. Solution Methodology Use algebra to find the best solution. (Simplex algorithm) Decision Models -- Prof. Juran

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49. Decision Models -- Prof. Juran

50. Decision Models -- Prof. Juran